Search Acumen comments on HMRC’s latest property transaction data for April

Andrew Lloyd , Managing Director at Search Acumen, says:

“Today’s transaction data reveals the extent of the challenges facing not only the UK property market, but our wider economy. Any thought that we were already past the worst of it has proven misplaced.

“Given the greater vulnerability of the residential property market, where hesitation on the part of one buyer and seller can snap a much longer chain of transactions, it is no great surprise to see a dip in residential transactions in the face of substantial house price uncertainty. As the UK bakes under a summer sun, we have had no real spring bounce to talk of.

“What’s ahead for the property market is likely a flattening of transaction volumes, balancing the underlying market swings of supply and demand that keep it steady, against a trend of deals falling out of bed as prices and affordability remain unclear. Data might start to show a spike in smaller landlords continuing to sell up after the combination of tax and regulatory shocks following the Renters Rights Act. Consequently, we’re likely to see more corporate landlords taking their place.

“The commercial property market has proven equally exposed to the structural challenges it is facing up to. Today’s dip in monthly transactions points to choppy waters ahead for market confidence and some delayed deals. Sentiment and demand have been improving but remain relatively muted, especially outside prime assets. However, investors in this market do have the ability to watch and wait for the right opportunities in a way that home movers can’t, creating a natural guard against some of the sharper swings that can emerge in residential transaction data.

“There are some notable bright spots, too. Demand for data centres is clearly not going anywhere, but it is no Atlas carrying the weight of the market on its shoulders alone. Interest rates remain a key market driver. The possibility of further rate rises may prompt some buyers to speed up their timelines in the coming months, as the hostility in the Gulf continues to weigh heavily on markets.

“If it was possible to meaningfully move faster, we may well have seen even more transactions over the last month to beat any potential interest rate hikes that could be coming our way. But sticky markets mean more deals are falling out of bed – we know more than half of residential property transactions in the UK fall through after an offer has been accepted.

“This is not just heartache for movers, but significantly economically damaging as the UK paddles furiously against broader headwinds. We are watching AI investment boom, so it makes sense that the use of technology and data standardisation across the property transaction chain must become the norm if we want to reduce risk and accelerate growth. Otherwise, we can expect to see this engine continue to cough and splutter more often than it should.”